Rising premiums haven’t pushed Floridians to abandon flood insurance. The rest of the country tells a different story, and it’s one that puts the federal flood program under real strain.
A new study published in the Journal of Catastrophe Risk and Resilience finds that hundreds of thousands of US households have dropped or skipped flood insurance in recent years after federal rates climbed nationwide.
Lower-income households face the sharpest exits, especially where price increases hit hardest.
The shift traces back to Risk Rating 2.0, FEMA’s overhaul of the National Flood Insurance Program’s pricing. The goal was straightforward. Price flood risk more accurately. Pull the NFIP out of deep debt after decades of underpricing homes that flood again and again.
Congress pushed the National Flood Insurance Program into January 2026 through the continuing appropriations bill signed on Nov. 12.
The extension landed fast, and so did the calls to overhaul FEMA, which runs the program and keeps taking heat for slow processes, odd incentives, and clunky systems.
Lawmakers let the NFIP lapse on Oct. 1 after failing to lock down a funding deal, partly because enhanced Affordable Care Act tax credits expire at year end and turned into a bargaining chip. Honest truth, it was a mess.
We’re finding that in households where the income is on the lower side, the drop-off in policies is even higher
Jesse Gourevitch, an economist at the Environmental Defense Fund
On paper, it’s doing that. Premiums rose in higher-risk areas and fell in lower-risk ones. In practice, policy counts slid. The study shows new flood insurance policies down as much as 39% and existing policies down 13% in just four years.
That’s bad news for a program already carrying $22 bn in debt. It’s worse when paired with climate pressure. The cost to insure flood-prone homes climbs further.
Congress hasn’t delivered a structural fix. Instead, it has passed 34 short-term extensions to keep the NFIP running. The uncertainty lingers.
Florida’s position matters more than most. The state holds roughly one-third of all NFIP policies, more than any other.
Flood payouts also carry real weight in disaster recovery. An analysis by the Florida Policy Institute shows NFIP claims made up about 50% of the federal disaster aid Florida received last year.
Lawmakers have introduced bipartisan bills in both chambers aimed at reform. FEMA’s review council is expected to release a draft report soon with proposed changes.
“This is an issue that has really broad impacts and it’s not getting better,” said Joanna Slaney, vice president for political and government affairs at EDF. She said temporary extensions don’t solve affordability or stability problems and leave homeowners exposed.
Risk Rating 2.0 tells a split story. A separate analysis by the Coalition for Sustainable Flood Insurance found nearly 300,000 fewer NFIP policies nationwide since the pricing change rolled out. Louisiana saw an 18% drop. Texas lost about 188,000 policies, or 24%, over four years.
Florida bucked the trend. Since 2021, the state added nearly 100,000 NFIP policies, roughly 6% growth.
Homeowners insured by Citizens, the state-backed insurer of last resort, must also carry flood insurance, flood zone or not.
Under Risk Rating 2.0, about 20% of Floridians saw premiums fall. Most saw increases, though often modest. 68% faced hikes under $120 a year. Eight percent saw increases between $120 and $240. Four percent paid more than $240. In total, premiums rose for about 80% of policyholders.
Even so, Florida joined Louisiana and eight other states in suing the federal government in 2023 over the rollout. Attorney General Ashley Moody argued the new pricing plan made coverage less affordable and didn’t serve the state’s needs.
Affordability keeps surfacing as the pressure point. EDF’s policy platform calls for stronger subsidies for lower-income homeowners in high-risk areas.
We do need to make sure that people who need the resource the most can afford it. The people who need insurance the most are the people who are paycheck-to-paycheck.
Talley Burley, EDF’s senior manager for climate risk and insurance
Private insurers are stepping into the gap. Fitch data shows private flood policies nearly doubled, rising from about 277,000 in 2020 to roughly 569,000 by 2024.
Florida’s Office of Insurance Regulation reported a 6% increase in private flood premiums from 2023 to 2024, on top of a 26% jump in federal flood premiums over the same period.
In lower-risk areas, private coverage can come cheaper than NFIP policies. That helps homeowners. It complicates the federal program’s math.
If private insurers take most of the lower-risk properties, NFIP gets left with the riskiest homes and the thinnest margins. That imbalance makes an already fragile program harder to stabilise.
Or, if Congress decides to follow the call of some politicians and privatize the flood insurance market entirely, that could spell trouble.
